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How much economy of Georgia may lose due to ban on passenger flights from Russia

Tourism Materials 24 June 2019 14:09 (UTC +04:00)

Baku, Azerbaijan, June 24

By Tamilla Mammadova - Trend:

By 2020, the economy of Georgia may lose up to 1.5 percent because of the Russia's ban on direct passenger flights to Georgia, Deputy CEO, financial director of Georgian TBC Bank Georgy Shagidze said, Trend reports citing newsgeorgia.ge.

As Shagidze noted, Georgia’s economy should have increased this year to 5 percent, and that’s what has been happening till lately. In April 2019, the National Statistics Service of Georgia "Sakstat" published data, according to which economic growth in the country in the first quarter was 4.7 percent.

If Moscow’s decision is not temporary and the ban lasts a long time, this will certainly have a negative impact, said TBC Bank financial director. At the same time, Shagidze noted that it is quite possible to neutralize the negative impact.

“This can be done in two simple ways. By intensifying fiscal incentives, of which, I am sure, the government is already thinking, and secondly, by activating in the field of mortgage loans. As a result, the impact of this negative effect can be reduced by one percent. Accordingly, the economy will still be able to grow by four percent”, said Shagidze.

The financier also gave a forecast about the impact of the decision of Moscow on the tourism industry of Georgia, the area, which in 2018 accounted for 7.6 percent of the country's GDP ($3.2 billion). Shagidze is confident that even under the embargo, Georgia will be able to break the record and receive 9 million tourists this year compared to 8.7 million.

According to him, Russia's share in tourism is large, up to about 20 percent, and this share has increased especially in recent months. In the most negative case, perhaps, the number of Russian tourists will be reduced by half and Russia's share in tourism will decrease by about 10 percent.

On June 21, Russian President Vladimir Putin, against the background of protests in Georgia, has banned air travel to the country since July 8. According to his decree, tour operators are advised to “refrain” from selling tours to Georgia.

(1 USD = 2. 78 GEL on June 24)

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